Japan on Thursday agreed to kick off free trade talks with Thailand, Malaysia and the Philippines early next year, in what is seen as an attempt to counter China's growing influence in Southeast Asia.

The moves seek to open to Japan markets of 165 million people representing an annual 300 billion dollars in economic output.

In exchange, the three countries

are looking for free access to the world's second largest economy, worth four trillion dollars a year and home to 127 million people.

No deadlines were set for the negotiations, but the potential benefits were enormous, according to joint study reports released Thursday.

While Japan could expect up to a 0.35 percent boost to annual gross domestic product (GDP) if it inked free trade deals with all three nations combined, Thailand could

enjoy up to a 20.09 percent gain, Malaysia 5.07 percent, and the Philippines 3.03 percent, experts said in the reports.

"I hope an FTA (free trade agreement) will promote not only economic relations but also contribute to developing broad friendly relations," Japanese Prime Minister Junichiro Koizumi told his Thai counterpart Thaksin Shinawatra in their bilateral meeting, a Japanese official said.

Thaksin acknowledged

that "there may be difficult issues, but it is important for us to start talks, " the official said.

Noting that "due consideration " was needed for sensitive industries, the two leaders said in a joint statement that negotiations should begin early next year and "be concluded within a reasonable period of time."